Correlation Between IBL HealthCare and Pakistan Synthetics
Can any of the company-specific risk be diversified away by investing in both IBL HealthCare and Pakistan Synthetics at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining IBL HealthCare and Pakistan Synthetics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IBL HealthCare and Pakistan Synthetics, you can compare the effects of market volatilities on IBL HealthCare and Pakistan Synthetics and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in IBL HealthCare with a short position of Pakistan Synthetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of IBL HealthCare and Pakistan Synthetics.
Diversification Opportunities for IBL HealthCare and Pakistan Synthetics
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IBL and Pakistan is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding IBL HealthCare and Pakistan Synthetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Synthetics and IBL HealthCare is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on IBL HealthCare are associated (or correlated) with Pakistan Synthetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Synthetics has no effect on the direction of IBL HealthCare i.e., IBL HealthCare and Pakistan Synthetics go up and down completely randomly.
Pair Corralation between IBL HealthCare and Pakistan Synthetics
Assuming the 90 days trading horizon IBL HealthCare is expected to generate 0.72 times more return on investment than Pakistan Synthetics. However, IBL HealthCare is 1.38 times less risky than Pakistan Synthetics. It trades about 0.06 of its potential returns per unit of risk. Pakistan Synthetics is currently generating about 0.01 per unit of risk. If you would invest 2,642 in IBL HealthCare on September 2, 2024 and sell it today you would earn a total of 1,656 from holding IBL HealthCare or generate 62.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 88.06% |
| Values | Daily Returns |
IBL HealthCare vs. Pakistan Synthetics
Performance |
| Timeline |
| IBL HealthCare |
| Pakistan Synthetics |
IBL HealthCare and Pakistan Synthetics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IBL HealthCare and Pakistan Synthetics
The main advantage of trading using opposite IBL HealthCare and Pakistan Synthetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IBL HealthCare position performs unexpectedly, Pakistan Synthetics can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Pakistan Synthetics will offset losses from the drop in Pakistan Synthetics' long position.| IBL HealthCare vs. Masood Textile Mills | IBL HealthCare vs. Fauji Foods | IBL HealthCare vs. KSB Pumps | IBL HealthCare vs. Mari Petroleum |
| Pakistan Synthetics vs. Masood Textile Mills | Pakistan Synthetics vs. Fauji Foods | Pakistan Synthetics vs. KSB Pumps | Pakistan Synthetics vs. Mari Petroleum |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |